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Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC_1 = 4 - 2E_1 MAC_2 = 8 -
Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E):
MAC_1 = 4 - 2E_1
MAC_2 = 8 - E_2,
and assume marginal external damages (MED) from aggregate emissions from the two firms (E_Agg) is:
MED = E_Agg.
The total external damages at the socially efficient level of aggregate emissions is ____.
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